# Question 6 (7 points) [7 marks] For the following question, . You get 2 marks for choosing the correct answer. . You can get up

Question 6 (7 points)

[7 marks] For the following question,

. You get 2 marks for choosing the correct answer.

. You can get up to 5 marks for detailed solutions

An economy has two people, Adam and Betty. There are two goods, good x and good

y. Adam has an initial endowment of 12 units of x and 12 units of y. Betty has an

initial endowment of 24 units of x and 6 units of y. Adam’s utility function is

U (Xa, )a) = Xaya, Where x. is his good x consumption and y. is his good y

consumption. Betty’s utility function is U (xb, yb) = xby , where x, and y, are her good

x and good y consumption, respectively. At every Pareto optimal allocation,

(a)Adam consumes more good y per good x than Betty does.

(b) Betty consumes equal numbers of good x and good y.

(c) Adam consumes the same number of good x as Betty.

(d) Adam consumes 18 units of x for every 9 units of y that he consumes.

(e) Betty consumes 12 units of x for every 3 units of y that she consumes.

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